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ACPAPP: Redefining the public accounting practice

Redefining the public accounting practice

In his acceptance speech as the 2005 president of the Association of Certified Public Accountants (CPAs) in Public Practice (ACPAPP), Greg Navarro very candidly described the current predicament of CPAs by borrowing Dickens’ famous opening line from the novel A Tale of Two Cities: “It was the best of times, it was the worst of times.” Looking back at recent events that affected the profession and what CPAs now have on their plates, the comparison could not have been more apt.

Four years after the biggest scandal in corporate America brought down a leading power company and one of the big five accounting firms, CPAs all over the world are still struggling with the slow climb towards rebuilding the public’s eroded trust. “The scandals urged accounting professionals everywhere to take a hard look at themselves,” says Navarro, who is also managing partner and COO of Punongbayan & Araullo, a leading public accounting and tax advisory firm in the country.

In the Philippines, CPAs were already cleaning house even before the scandal broke out; early in 2001, the Philippine Institute of CPAs approved the adoption of international auditing standards (as promulgated by the International Auditing Practices Committee) to establish a global, more comprehensive benchmark for local practitioners. The move would effectively put local CPAs in step with their global counterparts in harmonizing financial reporting standards.

The government has also put in motion a measure to curb corporate abuses. House Bill 286, or the Corporate Reform Act, mirrors the US’s Sarbanes-Oxley Act of 2002 and proposes to establish clearer standards for corporate accountability and impose tougher penalties on violators.

“The country has its share of Enrons, Tycos and World Coms,” admits Navarro, who has taken on the theme CPA Redefined: Setting the Standards for Good Governance for his term as ACPAPP president. As the local advocate of individual and institutional public practitioners, ACPAPP is likewise throwing its weight behind efforts at strengthening integrity in the country’s corporate culture.

One of the association’s main concerns right now is training CPAs on the details of the newly adopted International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board. Seen as a shift from the rules-based standards – which many white-collar criminals were able to sidestep partly because it was too detailed – to principles-based standards, the IFRS aims to provide accountants with a conceptual basis for good reporting.

“The new ethical, accounting and auditing standards provide guidelines on how CPAs should do their work, conduct themselves, prepare their reports, and also what ethical and professional standards they have to meet,” explains Navarro, who lauds the development. “But these standards are new not only to the Philippines, but to the rest of the world as well, so there are no precedents or prior guidelines on how to roll them out.”

This is where ACPAPP hopes to play a significant part. For the past ten years, the association has been very active in standards training, with institutional members collaborating in sharing resources and collating training materials for the instruction of the individual members and small practitioners. With the adoption of the IFRS, ACPAPP is laying out plans to make sure CPAs – even those practicing in outlying provinces – will have access to IFRS materials and will be instructed in its tenets. “Not all practitioners can afford to attend the seminars abroad, or even dole out P60,000 for training fees,” reveals Navarro. And that’s precisely why he has hit the road running as ACPAPP’s new president: “We’re joining the worldwide reform not just as a follower, but as proactive professionals; we’re taking a bullish attitude towards these changes.& ;rdq uo;